The proposed increase in betting tax rates would drive punters to play with unlicensed operators in the UK. That’s the position of two-thirds of punters surveyed by YouGov.
YouGov’s research revealed that the majority of respondents were concerned about the impact of higher taxes. As such, around 65% of gamblers agreed that higher taxes would drive them into the illegal market. “It would cause customers to turn to unregulated betting sites,” the study said, as they would not pay taxes, if the costs were passed on to the consumer.
In April, the Treasury announced a tax consultation, proposing to replace three tax rates on online gambling with a single one. The consultation has been open since May 6 and closes on July 21.
Current rates include Remote Gaming Tax (RGD), General Betting Tax (GBD) and Group Betting Tax (PBD). Remote activities are taxed by RGD at 21% of the operator’s profit. In addition, GBD is taxed at 15% of profit and PBD at 15% of net betting revenue.
It is therefore not yet clear what rate the government will set for the so-called Betting and Gaming Tax. However, the industry has expressed concerns that the betting tax rate could increase in line with the remote gaming tax. This is because all three rates are consolidated.
Can operators absorb the impact of the tax rate increase?
Commenting on the matter, Melanie Ellis, partner at Northridge Law, issued a warning. “While some operators could absorb the impact of tax rates to some extent, many are already operating on tight margins.”
“Particularly smaller, newer brands that are trying to grow their market share will be affected,” she said.
“The BGC (Betting & Gaming Council) is concerned that bookmakers will be forced to offer less favourable odds to maintain a profit margin, but it may be that a tax increase will simply lead to a market contraction, with only those able to absorb the tax increase remaining in the market,” he added.
“This in itself will likely drive customers into the grey market and unfortunately the most vulnerable will be the most affected.”
BGC criticises UK’s increase in online gambling taxes
The BGC has already issued several warnings about the impact of the alleged changes in tax rates. According to the regulatory body, they could threaten markets such as horse racing.
“This shocking statistic underscores what is at stake if the government forces counterproductive tax increases on ordinary customers,” BGC CEO Grainne Hurst said of the YouGov survey results.
“Of course, this will not raise taxes. It simply risks forcing large numbers of customers to abandon the regulated market, with its world-leading player safety standards, and into the arms of the growing, illegal, unregulated and unsafe online gambling black market.”
BGC: Research is a warning to the government
Any tax rises would be a “mockery” of the government’s growth strategy, Hurst said. The Labour Party has been back in power for almost a year, having won the 2024 general election by a landslide.
“This is a wake-up call for the government,” Hurst said. “Gamblers have been loud and clear: if you tax them more, they will abandon sports like racing and head straight to the black market, triggering a downward spiral.”
In this regard, the BGC highlighted its own recent study into the state of the black market in Britain. It found that British gamblers currently gamble up to £2.7 billion online through black market operators.
“This growing, unsafe and illegal black market in gambling does not contribute to sport,” the BGC said. “It pays no tax and targets customers vulnerable to harm, including those who are self-excluded.”
